Reverse Mortgages

A reverse mortgage is a special type of loan made to older homeowners to enable them to convert the..

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Interest Rate

The most common buydown is the 2-1 buydown. In the past, for a buyer to secure a 2-1 buydown they would pay...

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Loan Programs

Fixed Rate Mortgages - The most common type of mortgage program where your monthly payments for interest and principal never change...


Standard ARMS and the Differences - Choosing an ARM with an index that reacts quickly lets you take full advantage of falling interest rates...


Introductory Rate ARM's - Most ARM's have a low introductory rate, which is good anywhere from 1 month to as long as 10 years...


Reverse Mortgages - A Special type of loan made to older homeowners to enable them to convert the equity in their home to cash to finance other needs...


London Inter Bank - LIBOR is the rate on dollar-denominated deposits, also know as Eurodollars, traded between banks in London...


Interest Rate Buydowns - The buyer would pay points above current market points in order to pay a below market interest rate during the first two years of the loan...


Cost of Funds Index (COFI) - The ratio of the dollar amount paid in interest during the month to the average dollar amount of the funds for that month...


Graduated Payment Mortgage (GPM) - With a GPM the payments are usually fixed for one year at a time.


Choosing The Best Program - The right type of mortgage for you depends on many different factors


Cost of Funds Index (COFI)

The 11th District Cost of Funds is more prevalent in the West and the 1-Year Treasury Security is more prevalent in the East. Buyers prefer the slowly moving 11th District Cost of Funds and investors prefer the 1-Year Treasury Security.

The monthly weighted average Eleventh District has been published by the Federal Home Loan Bank of San Francisco since August 1981. Currently more than one half of the savings institutions loans made in California are tied to the 11th District Cost of Funds (COF) index.

The Federal Home Loan Bank's 11th District is comprised of saving institutions in Arizona, California and Nevada.

Few people who use and follow the 11th District Cost of Funds understand exactly how it is calculated, what it represents, how it moves and what factors affect it.

The predecessor to the 11th District Cost of Funds index was the District semiannual weighted average cost of funds published for a six month period ending in June and December. The San Francisco Bank was the first Federal Home Loan Bank to publish a monthly cost of funds index.

The funds used as a basis for the calculation of the 11th District Cost of Funds index are the liabilities at the District savings institutions: money on deposit at the institutions, money borrowed from a Federal Home Loan Bank (known as advances) and all other money borrowed. The interest paid on these types of funds is the cost of these funds.

The ratio of the dollar amount paid in interest during the month to the average dollar amount of the funds for that month constitutes the weighted average cost of funds ratio for that month.

The average cost of funds is said to be weighted because the three kinds of funds and their costs are added together before a ratio is computed rather than calculating averages individually for the three sources and using a simple average of the three ratios. This gives the greatest weight to the interest paid on deposits, and explains the delayed reaction of the index to rising fixed-rate mortgages.